[ET Net News Agency, 23 June 2015] SouthGobi Resources (01878) said it has negotiated
private placements of its common shares for aggregate gross proceeds of US$31.6 million
with sophisticated investors to inject additional capital resources into the company.
Closing of the placements is expected to occur on or before 14 July. SouthGobi will
issue the investors about 55 million common shares, priced at C$0.71 per share (a 20%
discount to the five day volume weighted average price of the common shares on the TSX at
19 June 2015). As a result, the new common shares represent in the aggregate about 21%
equity interest in SouthGobi following completion of these issuances.
A supply agreement has been executed with a China-based buyer for the sale of 1.8
million tonnes of coal from July 2015 to July 2016. Discussions are continuing with other
third parties in connection with additional coal supply agreements and SouthGobi
anticipates negotiating further agreements as it ramps up its production schedule as a
result of securing additional financing to address its working capital requirements.
Until the proceeds of the private placements are received, SouthGobi has secured a loan
for up to US$8 million from a principal of Novel Sunrise, with immediate availability, to
address funding obligations pending the closing of the private placements. Advances will
be in a minimum amount of US$2 million, with interest at LIBOR + 12% per annum, payable in
cash on a quarterly basis in arrears, and maturing on 18 June 2016. The loan is unsecured
and is subject to mandatory repayment upon completion of US$30 million of equity or other
debt financing.
SouthGobi has also secured a revolving loan commitment of Rmb200 million from a Chinese
commercial bank, subject to the finalization of definitive documentation. The revolving
loan commitment is intended to provide additional support to the company in funding its
operational objectives. The utilization of these funding facilities made available to
SouthGobi will meet the requirements for permitted debt under its existing convertible
debenture agreement with the China Investment Corporation.
The TSX advised SouthGobithat it has granted a further 30 day extension of the delisting
review to 22 July 2015 to permit completion of the proposed private placements of common
shares. (HL)